The Story Behind Lex's $5.6M Seed Round (Jennifer Lewis / Lex)

By Jason Yeh
June 4, 2024
56
min
Listen on Apple Podcasts
Jennifer Lewis
Lex
Funded
Jason Yeh (host)
Sponsors
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The Story Behind Lex's $5.6M Seed Round (Jennifer Lewis / Lex)

In this episode, we dive into the unpredictable world of startups, where the only constant is change. Joining us is Jennifer Lewis, co-founder and CEO of Lex, a pioneering social app for the LGBTQ community. Jennifer shares her rollercoaster journey through the venture-backed startup landscape, a path filled with highs and lows, trials, and significant growth. Despite the notion that startups should be smooth sailing, Jennifer's experience tells a different story—one of persistence and resilience. She recounts the daunting challenges she faced while raising capital, which paradoxically energized her and her team to secure a substantial $5.6 million seed round. This episode reveals how coming close to failure can unveil a newfound strength and determination. We also take a personal look at Jennifer's background, tracing her unlikely path from her early years to becoming a leader in tech innovation. Her story is a testament to the unexpected turns life can take and the transformative power of embracing them. Tune in to gain insights into the gritty realities of startup life and the pivotal moments that can define a company's success.

Episode Transcript

[00:00:00]

But some of those agreements from some of our lead investors actually three of our lead investors at that point or like our biggest checks at that point, were used SVB.

Jason Yeh: Oh jeez

Jennifer Lewis: So suddenly even that money that I thought I had was

When you're running a startup, you're bound to face some curve balls.

There's no such thing as a smooth sailing startup. And if there is, well, it's probably not going to the moon. Running a venture backed startup means you are signing up for a journey. One that has a lot of ups and downs, tons of trial and error and loads of hardship that pushes you to grow.

for today's guest, the downs she experienced while raising ended up being exactly what she needed [00:01:00] to energize herself, to finally push for a $5.6 million seed round. Sometimes it takes getting close to the edge of failure to discover just how resilient you are.

Today, I'm talking with Jennifer Lewis, co-founder and CEO of Lex.

One of the first social apps created for the LGBTQ plus community. Looking back at Jennifer's childhood, she probably would have never guessed she'd end up running the company she does today.

Jennifer Lewis: so I grew up in Ipswich born in the eighties and like a small suburban town. My parents were Christian they both worked for the local government. You know, I thought that I was going to be like a teacher or a doctor. That was really the, I didn't know that business even existed. Um, and I didn't know, you know, entrepreneurism was just like not in my worldview.

Um, LGBTQ gayness was not in my worldview. I, um, Don't remember even meeting someone who identified as LGBTQ until I was 22. [00:02:00] Um, gay was a word that was used in playgrounds as a slur. It was like an insult. Um, so nothing in like my early childhood was predicted that I would be where I am now. And really it's kind of like this series of steps that now make a lot of sense in hindsight, but yeah, I think it's, that it's, it's really been an evolution.

I kind of like jump into that.

Jason Yeh: Yeah, well, I'll stay there and sort of your earliest years didn't sound like you had inspiration on the entrepreneurial side. Didn't sound like you had any inspiration around sort of like these new modes of being. Um, what about your own personality? Like are you outgoing? Were you shy? Do you remember what your relationship with money was like?

Ha ha,

Jennifer Lewis: Yeah. So my, there's a family, like family folklore that my mom tells, which I'm the middle child. She says that my, her, um, her labor with me was like 19 minutes long from start to finish. And the joke is that they barely got out of the hot, I was almost born in the car. [00:03:00] And, uh, when I got into the hospital, I came out so fast that the midwife had to like catch me, um, because I was about to fall off the bed.

And so my mom tells that story to like anyone new who wants to hear it, that like I came out running and at speed and like, that's how I've lived my life ever since. So I think that's like a, so I've always been a kid that was like interested in everything again, like dropping me off at work. Everyone else was like crying and didn't want to go.

And I was like already run off. My mom was like, don't you want to say goodbye? So I think I've always had an adventurousness and like a, an a Curiosity. I think that's it. Like that's what's where I think defined my career and is where has, where has got me to where I am is like, I'm just super interested in like learning the world and learning people and like in innovating and like trying new things.

And like as a kid I was always the one that wanted to like jump off the playground or do the new stuff or like, and I did a lot of like craft and building and I was always like, [00:04:00] always, you know, I didn't like toys or dolls. I just wanted to make things. So I guess I was always like building stuff as a kid.

Um, I'd never really thought about that until now. Um, but yeah, that was who I was as a child.

Jason Yeh: Okay. So that makes a lot of sense. It sounds like you had this go, go, go nature, a bit of a ambition, if you will, even if it was just to learn or do the next thing. So we're, we're going to try to get you quickly to how you got to Lex. Um, but there is a bit of a gap, right? Like if you didn't have the inspiration on the entrepreneurial or technology side of things, something would have had to direct that energy.

to land in more of the technology sphere, the startup sphere. Can you tell me how that sort of played out and like bring us to current day Lex?

Jennifer Lewis: Yeah, so I think that, as I said, I grew up without being in that world. And I think when things really changed for me is I went to Oxford University, um, I studied English literature and it was at that point where I started interacting with people from completely different [00:05:00] backgrounds to me. You know, all of the investment banks started courting us and, you know, it became suddenly there was this whole new world of business that was being opened up to me and, um, and also just a whole new world of people that challenged me.

I remember being in my interview for Oxford and the tutor asking me a question. And it was the first time that I remember someone really challenging my view and making me be like, Oh yeah, there's another way of doing this. And like that feeling of feeling challenged and being around the best people in the world is like the thing I think.

It was like a pivotal moment. And I feel like now I'm like constantly chasing that. When I interview candidates to work with me, I'm like, are they going to be that person that is going to. Like ask me an interesting question that is going to make me think differently. So like that was probably a real kind of turning point.

I actually left my first job. So I left my first job. I was actually in at the age of 20 and I was working for a, actually a tech, working tech, that was my first job. Um, working for a small [00:06:00] consultancy that, that helped early stage startups that had spun out of British telecoms incubator, British telecom is the incumbent phone company in the, in the UK.

And the first. Project I worked on, I remember 21st birthday, depressing 21st birthday, but it got me here, um, was building this market model to predict the size of online or personalized online advertising. And the company that I was building this for ended up being Cambridge Analytica. Um, so

Jason Yeh: funny. Yeah.

Jennifer Lewis: remember calling. And that was just a real moment for me of being like, okay, here's how I can take data that exists, but also take some hypotheses and make some assumptions about like how big this can scale. And yeah, it really got my brain thinking about like, how can I, how can I do more of this? How can I really think about like where markets are going and where businesses are going and how can I be a part of it?

Um, sorry. That was a kind of a great intro. And then this is the 2007 financial crisis happened. [00:07:00] Um, you know, within my first year of working, uh, also the same year, the iPhone came out, so like lots of stuff happening and, I had that job ended up, the startups weren't being funded anymore, so that job was no longer.

And I ended up going into advertising. In London, I worked for lots of kind of world class advertising agencies like Leah Burnett, Wieden Kennedy. Um, and I worked for a lot of kind of very well known iconic brands like PepsiCo, um, lots of Procter Gamble, Unilever companies. I worked for Nike for a really long time, Gap, and again, I was a strategist.

And what that really taught me again was. I was doing a lot of consumer research and looking at the market and, um, doing a lot of product innovation. And it really taught me how can I, what's happening in the market now that we can build a product for that's going to be available in five years time.

So again, I was really, you know, working with these, these customers. You know, when you're working for a company like Unilever, their product development cycle is like five years. So you're really, um, having to think about what's going to catch in [00:08:00] five years time and then what's the consumer messaging around it.

And while I, and I just loved that kind of thinking and I, but I didn't love the timeline. The five years doesn't work with, yeah, doesn't work with what you know about me so far. Um, so it was at that point I kind of went into the startup world and by that time I was in New York.

Jason Yeh: That, uh, filling in the gaps there makes a lot of sense. It's like, it is really one of those things where if you just got pushed in the right directions, this is the eventual outcome that probably your mom would predict, right? Like, if that's where you came out for your first job, that you were just going to get to, uh, at, at some point leading your own tech company, which is where you are with Lex.

And, uh, You know, we're going to fast forward because I'm sure you've been interviewed a lot about Lex and what you're doing and the origin story there. but what's most interesting to me and for these stories is what it takes to raise capital for a company in [00:09:00] certain environments. We saw as we were doing our research that you raised a great round of capital.

I think what was announced was over 5 million, announced October of 2023, which as we were talking right before this interview, um, you know, we all know that the announcement dates, uh, are far later than when actually, when that actual fundraise was going on. So my estimation is that you were probably raising your seed round in maybe one of the more difficult times in the history of venture capital.

And so what I would love to talk through is really what was happening before you decided to raise. Like when you were thinking, okay, we got to raise capital. I think now is the time. Do you remember what, you know, tell us when around like what period of time that was and what was happening in the company that made you feel like, okay, we got to go raise capital now.

Jennifer Lewis: So I think it is worth showing a little bit of the background of Lex to help set the [00:10:00] context for this. So Lex is the, is, uh, is the social app for LGBTQ community. We actually, Lex was originally started on Instagram and we originally, yeah, it was originally, it was inspired by old school personal ads on a magazine called On Her Backs, which was a erotica magazine published in the eighties, um, that my co founder, Carol, really fell in love with.

And we saw the way that people were. Connecting on these ads. And we were like, hold on, there's something interesting here. So our MVP was built on Instagram with Google sheets and people submitted a profile and we put it on Instagram. People DM'd each other and hooked up in the comments or made friends in the comments.

So that was how we began. We raised our 50K, we raised 50K on Kickstarter, launched the app into the app store, and then everything kind of went from there. Um, so since day, from day one. We have been really like connected to our LGBT community and really, really kind of like start, we've, we've always had this kind of like brand advocates behind us and these like series of users that have been like with us since day one.

And what we [00:11:00] had, and the reason that we went out to raise in that time is because We saw like a huge opportunity in not in kind of growing that market beyond our early advocates. So when we had initially started, we were very much in the dating phase. Um, and we started to see during COVID that people were using our app for community.

Um, and we thought, you know, coming out post COVID, when we look at the, um, we look at the statistics around Gen Z and loneliness and the statistics around Gen Z and LGBTQ one in one, five Gen Zers, LGBTQ. Gen Z is 40 percent of the global population that we just started to see there was this huge opportunity to actually lead the way in Gen Z social and lead the way in LGBTQ social.

And again, when we looked at what was happening in the market with LGBTQ and social, um, LGBT users were being completely underserved. So like 80 percent or 88 percent of LGBT youth, according to GLAAD, don't feel safe on social media. Um, so there's a real, we just started to [00:12:00] see all of these things happening in the market, both around Gen Z and LGBTQ, that we're What was currently serving our user, what will currently exist wasn't serving our users.

And we felt that there was a real opportunity for Lex to kind of scale beyond this, you know, kind of small matching platform to really be a social space for LGBTQ. Grindr had just IPO'd back in November. So again, that was really a sign to the market that like LGBTQ, um, is going to be 20 percent of the future population.

So there is, there is a market here. And I think that was a new feeling. Um, for a long time, it'd been really hard to convince people that this was a big enough. market, but finally Grindr and then this new data around Gen Z. It just really felt like there was a moment that, was entering the market that, you know, there, there's a, there's a huge gap.

There's a wide open gap. There is no other social platform, LGBTQ. There is dating platforms, but there's no one in social and I believe really strongly in like the new era of vertical, like vertical social. So.

Jason Yeh: Yeah.

Jennifer Lewis: I think there's a lot, you know, we look at apps like Peanut or Letterboxx or [00:13:00] even Strava, you know, all of these communities that are built around specific use cases and needs, just felt like there was a lot happening and The reason we chose to raise then is we also, we were rebranding in January of this year to be, to enter this new position of the LGBT social app.

So it was really the moment to, to enter the market and to capitalize. And, you know, we felt like we had a lot of momentum and we just wanted to like, go, go, go.

So that was kind of the decision to fundraise.

Jason Yeh: So you were talking about the, um, the grinder IPO. So that was like at the end of 2022, you start, you start seeing a market interest in like the right place, right time. You also just mentioned that the rebrand. So it's like, okay, that's like a good shifting of what we're doing. Can you mention anything about size of your business, size of your community at that point?

How did you think about that? Growth in your business.

Jennifer Lewis: Yeah. So we've, we've always been an organic, I, I feel I'm a growth market. So what we didn't touch is before my startup experience was six years prior to Lex where I was a growth marketer. I was head [00:14:00] of, head of growth for Tia, the women's healthcare company before that, a few other kind of pre seed series A, series B companies.

So my background is in growth. I know how to spend money. Um, But I also know that not all users are created equally and like retention is actually going to be the thing that builds this business. So part of our, part of my strategy with Lex was to really focus on organic growth and retention. So we have a million downloads.

We had half a million active users. That's kind of where we were. We went into Raise and really for us, we had, uh, we have day 30, 47 percent retention. So we'd really built a, a user base of like loyal users that really wanted us, wanted to use us and, um, 67 percent of users find us by word of mouth. And to date, we haven't spent any, like, Any like traditional acquisition marketing.

Everything's been really community led. Um, so, but I know that we could do more. [00:15:00] And I think that again is a reason why I wanted to raise, because if we, we'd built this really strong base in the markets where we had people and we'd started to do stuff, um, but there was just so much more opportunity out there.

And we would get people DM saying, please host a party or please run an ad in, in, in Wyoming. Cause I want more people on the platform here.

Jason Yeh: Awesome.

Jennifer Lewis: So we had a real like user need.

Jason Yeh: No, I think that's super helpful for people just hear concept or context around what was happening before you decided to kick off a raise because you know, a 5 million plus seed round is a big seed round, you know, even in today's market. And as we'll figure out, like as his, as the events played out and, you know, You know, the market that you were raising in really showed itself.

Like that is a big seed round. So I don't want anyone to think that there was some kind of magic or magic relationship or something. Someone just threw in 5 million. Like you had real traction, you had real pull from the market. Um, so it's great to hear that. before [00:16:00] we get into the actual motion of fundraising here, I wanted you to say a couple of words about Your feeling was getting ready to raise this next round.

Um, you had no idea what was about to come, right? Uh, which we'll touch on later. But the thing that you do know is that you're. a very underrepresented group when it comes to fundraising. And you had, I think, you know, the company had already raised, I'm not sure if you were leading the raises in the past, but for this specific one, you're about to go raise, and you know, in your head, multi million dollar, I don't know if the 5 million was a target. Um, but did you have any, anxieties or feelings about what it was going to take to raise capital with you leading the ship. Um, I'll leave that open ended to see like, you know, where your mindset was.

Jennifer Lewis: I mean, my personal mindset is I know those statistics that we talked about, but I, I, I don't care about them.

Jason Yeh: What are, what are the statistics again? Cause I want to make sure that it's shared right

Jennifer Lewis: [00:17:00] yeah, I guess I know them, but I, I know the statistics and I choose to ignore them. So the statistics are 2 of female founders, raise capital, which is actually down from 2.7 the previous year. So it's declining and 1 of LGBTQ founders raise capital. So. The odds aren't in my favor. but I, I can know the statistics and then choose to ignore them. Like I know that actually I am for the business that I am building. I am the person to do it, like, because of my background, because my personal story we can get into later if we want to.

Um, like actually someone else who looked, who did, who looks like a traditional Founder couldn't build this business and couldn't understand my user base. Wouldn't have the same desire and needs. so actually I am the perfect founder for this business. And like that, I think is what kept me going through the tough times.

And I've, and also I really want to prove a model. Like I think a lot about the people that inspired me and [00:18:00] I want to prove that. That, you know, a founder that looks like me with my background can build a multi billion dollar business and can, you know, be leading the tech industry in 10 years and be building the new generation of social.

like, that is my vision for myself and for this company. And I think there's even like the fact that that could be impact people in the future, like it is really, it's even more interesting for me. So I guess if anything, those statistics just push me faster and more kind of purposefully.

I get so excited when I see founders like Jennifer who are carving out their own path in the world of venture capital. It's not easy. Especially when the odds aren't in your favor. But the place of resilience, Jennifer was speaking from. It's exactly the mindset investors are looking for. When we come back, we'll be taking a deeper look at Jennifer's $5.6 million seed round.

[00:19:00]

Jason Yeh: I love that. Okay. So then let's, let's get into it. You kick off fundraising in earnest. Do you remember about what month of 2023 was the, the sort of formal kickoff?

Jennifer Lewis: Yeah, I mean, we actually kicked off formally in 2022, the end of

Jason Yeh: you [00:20:00] did? Okay.

Jennifer Lewis: Bad idea, shouldn't have done that.

Jason Yeh: Wait, actually, say more. Why is that?

Jennifer Lewis: Yeah. And I'm, it's funny, I'm, I'm already thinking about raising the series A and I've got so many lessons. I'm doing it so much better. because nobody wants to give you capital at the end of the year. Everyone wants to go for Thanksgiving and Christmas. It's just a bad time. Um, people aren't really engaged or they're trying to close their existing deals.

It's just, it's not a good time to move fast. Um, so we, we kind of, we opened an event, but it was, it was slow and it wasn't, it was tough and we didn't really get any traction and yeah, it was scary. We were like, okay, we thought, you know, is this the right thing? And fast forward to a few months. And I think really the turning point for us was the Silicon Valley bank crash.

By that point, we had some checks promised to us. We didn't have the cash in the bank, but you know, we had the agreements. but some of those agreements [00:21:00] from some of our lead investors, actually three of our lead investors at that point, or like our biggest checks at that point, were used SVB.

Jason Yeh: Oh,

jeez

Jennifer Lewis: So suddenly even that money that I thought I had. was gone And, I just remember being like, Oh, okay. And, that was actually the big, honestly, that I, that was the biggest blessing, like glad everything worked out for SVB and everyone who used them. but it was the thing, it was the, it was the, Fire in my belly or I can't think of what the word is.

It was the thing that really got me going again and really like very soon after that, we closed the raise. I think really what happened for me is I remember it was over the weekend. I was in Mexico city at the time and I was like, okay, there is. No way that I am letting this thing stop here. Like I'm so convinced about what I'm building and how I need it.

And I spent hours like trawling through Lex, trawling through our reviews, calling for our customer [00:22:00] service and just finding every single person that ever written into us saying how much they loved what we were doing. Um, I like now have a, like, I have a document and I just keep them in now. Um, you know, and I had these people telling me, like, I'm so grateful that you exist, like, thank you so much.

Like you've changed my life. Uh, you've really helped me accept myself. You've helped me find friends. You've helped me find my lover. You've helped me find a roommate. Like just being on this app makes me feel comfortable in my LGBTQ identity. Like just hundreds and hundreds of these, like emails DMs and posts on Lex.

And I just, I read them for hours and I was like, okay. These are the people that I cannot let down. And I just locked myself in my like Airbnb and I just redid everything. I redid the pitch. I redid the data room. I rewrote all of our emails. Uh, and I just infused it with like that energy of the people that needed us so much, and I was like, no, this is why I'm doing it.

And then Kel, my co founder, she. Got on, she [00:23:00] just sent out, you know, hundreds of DMS and LinkedIn's and like cold emails and just both of us were just like, okay, this is it. And like that, and just spent 48 hours just like, I guess, greasing the wheels. And then after that was really when everything started to like get in flow and like, we closed barely soon after that.

Um, but it, it took that big moment to, to really pivot.

Jason Yeh: So I actually want to contextualize that a little bit more too, because what you're talking about is that crash in March of 23, where I was part, I am part of that industry. I was part of that. Oh, my God, where everyone pulled back for a second. Anything that was happening stopped happening. Um, do you remember how much runway you had at that point? Finger

in there.

Jennifer Lewis: uh, three months, four months.

Jason Yeh: Oof. Okay. So that, that is very nerve wracking. Um, and then, yeah, you know, what I'll just say is, is sort of restate what you said and give it a different color is, people don't realize how important that energy that you put into your pitch, the materials and the way you [00:24:00] show up to those calls, because that's what venture capitalists are reading.

And I love that you, you, know, reminded yourself of like all the positivity and the reason you're doing it. Cause I think that truly does translate. And then that sort of like 48 hours of like, fuck, we gotta find all the possibil possibilities of like leads and people to talk to and stay up all night if we, if we have to, to, to find those things.

And, you know, I wonder if you remember finger in the air, and we don't need a specific number, but like the list of investors that you, you you thought were potentials that you needed to put at the top of your funnel. Like, were, were we talking 10, were we talking a hundred? Like where, where do you think that number was?

Mhm,

Jennifer Lewis: Good question. So actually everyone who, going back to like the statistics, actually everyone who, most people who came into our round were either women, people of color or their LGBTQ, um, from, even from like our VC funds, right down to our [00:25:00] angels. And so that was, again, that was, actually it was an advice that someone from Techstars gave me, um, You'll you at someone's portfolio and if they haven't ever invested in like a woman before, you're probably not going to be the first.

Um, so someone gave me that advice. And so, you know, part of narrowing down my list was like, looking at the portfolio founders and being like, okay, are, do they, Do they back people that look like me? Um, I was also really focused on people that were interested in Gen Z and consumer trends.

Um, that was a really big focus. Um, as well as anyone, you know, one of our lead funds was Slosson. Um, they raised in 2020, they're all about like economic inclusion. So any funds that believed in, in VC, the power of VC and capital to like change norms and provide, um, Yeah. Like, you know, Oh, he's amazing. He's brilliant.

Yeah. So I think my, so they were the people that were on top of my list was people that I felt they'd already invested in people that looked like me [00:26:00] and they've already believed in like what I was selling. I think that was. One of my like top tips is, you know, there was a few people that I would try and convince that it was just such an uphill battle.

I was like, okay, this, and I wasted energy on that. And I think that's, something that I'm learning going into the next fundraise is you want someone to already be halfway there on the thing that you're building and then you'll just, then it's a much easier, you know, I shouldn't be convincing them that, about the future of Gen Z, like that should be something that they're already interested in.

Then they'll know that LGBTQ is a huge market for them and they, they know the stats around social. So therefore I'm just proving how I can be the person to lead it. So my list got much smaller when I, um, when I closed on those parameters.

Jason Yeh: got it. So it started in the hundreds and maybe got down into sub hundreds.

Jennifer Lewis: But

Jason Yeh: Awesome.

Jennifer Lewis: I will, I will say one thing that I think really worked for us is we, and again, this idea of like creating momentum, which everyone always tells you to do, but it's like, how do I do it? [00:27:00] One thing that I found really worked for us is in the early days, we were relying from on like warm intros, so intros and fellow founders, or just trying to get reach outs from people that we knew.

Um, but it was slow and you're relying on other people to move for you and you can't control that timeline. And actually. When things really started flying for us was when we started doing a lot of cold outreach and some of that cold outreach were people that weren't really relevant to us. Like I think we reached out to like 300 scouts on LinkedIn.

Half of their scouts are not interested in consumer VC or, or tech. But I know that there are a lot of Slack communities and a lot of WhatsApp chats for scouts for early stage bcs and

Jason Yeh: and you'll throw the deal into the Slack

communities. And so people are talking about you. Fascinating.

Jennifer Lewis: So I was just like, I just have to get, even people that don't. Aren't ever going to invest in me. If they've heard my name and they've heard that we're raising that might go somewhere.

And we found actually that some of the investors that we, that finally invested in us had been like, Oh, like someone's we'd sent them our deck and they were like, Oh yeah, I've already seen this deck. [00:28:00] so I think that really helped is like. Don't underestimate the people that aren't going to invest in you because they can still talk about you.

That was like an unintended consequence that now I've, I think I attribute to part of the success.

Jason Yeh: I mean, part of the reason I love talking to founders is like, you know, I spend all my time thinking about this and I had never thought about that. I know the power of awareness and I know the power of like heat around the deal because there is this whisper network where it's like, heard about Jen, heard about Lex. And you don't know what the context is, but it makes you feel like. Oh, there are other people looking at this deal. if you're the one investor that has some interest, then you hear that and you're like, other people are interested. So that's, that's great. I love that. I took a note around that. Um, so in your process of fundraising, um, everything from what we talked about, Um, for, for investors that don't understand your background, your market [00:29:00] to starting in November, to raising around the SVB collapse, um, which impacted so much of our industry. There were probably more than a handful of situations that, you know, weren't that fun for you. Um, do you, do you remember

Any bad experiences with, with VCs?

Jennifer Lewis: No one was outright rude or, you know, everyone was like polite and nice. I think the worst experience was when we spent a lot of time with people and did a lot of additional work and due diligence and really spent time. And then it's a no at the end. Like that, that's the most frustrating thing because you've spent a lot of attention on like this lead that you think was a warm lead, but actually it's a cold, you know, actually it's dead.

Otherwise you could have been spending that time going out to other people. So I think that that's probably like the most frustrating thing. Um, It was frustrating sometimes when people would come and say, you know, this. At the time we hadn't monetized. We've now monetized. Um, it's very normal for preceded stage social [00:30:00] companies not to monetize cause you need to have a large enough consumer base to make that viable.

Um, but that was so a lot, there was a lot of doubt and we weren't monetizing with ads, which was a really big thesis of mine, I don't, you know, I'm not. When you look at what's happening now with like data privacy in the EU Facebook and moving to subscription, like one of my big theses is about social media 2.

0 is that it's, it's not ad funded, that it's like funded by the user because you want to align the outcomes of your platform and what you're building a product for with the way that you monetize. And if you're running ads, you've got two, two masters. So that's a really important factor to how I build.

And I think. There's, there's models of that, that are appearing now and working. But at the time, even six months ago, that was before, you know, now TikTok, Facebook have all announced they're doing subscriptions before that it wasn't a thing, so I think people not being able to see. The same potential that I saw.

I was like, no, I, this is the way it's going to happen. This is how it's going to change. Um, and like, here's why, but some people just, cause it didn't exist, hadn't [00:31:00] happened yet, they couldn't see it. And so I think sometimes that would be hard. I've heard someone be like, okay, I can see that you've got a great brand.

You've got great traction, but like, I don't believe in how you're going to monetize, um, but that was something that I didn't want to compromise on because I knew that the decisions I make now are going to affect my business in 10 years.

Jason Yeh: Jen, like, I think it's, it's worth saying that that's not easy to do, right? Like, you're speaking to these masters of the universe, these people that hold the purse strings that in some ways dictate your future, whether or not you're going to survive, if they're the only ones that might fund you and they tell you something.

And it's like, it can be very hard to hear this.

Jennifer Lewis: I

Jason Yeh: it or decide to push back. Because I'm sure you had the doubt of like, are they right though? You know, am I right? Are they right? And so, just want to make sure that I, I recognize how difficult that is and for you to get to, to where you are today. Um, and I don't, so I don't want to leave you on like, uh, I always ask the question about the negative parts. Maybe we can transition [00:32:00] to, you know, you're coming out of the, the, the difficult, time of everyone wondering will venture capital and our industry collapse along with SVB. It doesn't. And at some point, something happens. That makes you realize, Oh, we're going to do it. Like this round is going to close. Uh, was it, was it a major term sheet you got? Do you remember what the moment was that was like, ah, I think we're going to make it.

Jennifer Lewis: think it was when we got one of the, one of the funds that gave us a big check, um, we got inbound from them and,

Jason Yeh: Can

Jennifer Lewis: and they, they were looking like exactly for us. They were like, and they'd, they'd actually, we've realized, tried to reach out to us like six months earlier and it got lost in like a, Generic inbox.

So, um, that's the story for better admin. Um, but it was interesting. We got this inbound and they were, they were just [00:33:00] so excited about what we're building. Cause they're like, they had been looking for it. They really, they're a company that really focus on, um, companies that are focused on Gen Z that focused on real life interaction.

So we're.

Jason Yeh: share the firm?

Jennifer Lewis: Um, yeah, it was Best Nights.

Jason Yeh: Oh, very

Jennifer Lewis: They're a European firm. and they, and they ended up being like the last fund to come into round and then that's when we closed. Um, so I think having them come in and being so excited and being like, we've been trying to speak to you for six months. Um, That was the moment where I was like, Oh, okay, now we're going to do this.

And yeah, we, no, we didn't have to convince them about what we were doing and why they just were like ready to go. And they like really saw everything that we were doing. Yeah. That, I think that was probably, that was the last fun that came in. And yeah, I think that was really the moment.

Jason Yeh: That's awesome. You know, I, I, I think founders and investors share this, this piece of advice, but founders know that fundraising isn't the goal, right? That you can't do a lot of celebrating around fundraising, but it is a milestone. It is a marker that you're [00:34:00] going to keep going. Did you and your co founder do anything to commemorate that?

Did you pop a bottle? Did you have a high five? What was that?

Jennifer Lewis: Oh, I actually don't remember. I think we were just like relieved and then just like, now we've got to go.

Jason Yeh: it's like, Oh shit. You have that, that moment of happiness. And then it's like, gosh, it's go time.

Well, I feel like, by the way, your, your answer is quite common. Like, uh, founders who are so in it are like, huh, did we do anything? And, you know, part of my. Response is kind of like, maybe you should carve out a night out with your co founder and reflect on what you were able to do. Give yourself some, some grace and then continue on.

Jennifer Lewis: Yeah, I think it's because for me, I, as you say, like with, yes, we raised a great round, yes. I'm super proud of that, but like, we're still, you know, we're still in like day one of this company's life and the ambitions I have for it. You know, I'm, I'm like where we want to be in like, I'm thinking about the 10 year vision right now.

So [00:35:00] this day, there's so many more steps for me to get over before I can get to that space. And even that space, you know, there's going to be another iteration of it. But so I think for me, that moment is. It was just like step one. So I think just, I was already like, okay, step two. How do we get, like, what's the next phrase?

That like, what's the next, like, I've got to release my monetization features. Cause that was a big problem in the raise. I've got, I was just like already onto like the next thing. Um,

Jason Yeh: That's so good. Well, Jen, this is, has been an awesome walk down the path of how you got here and how you actually closed just a really incredible top line number. And one of the, like I said, most difficult markets ever for fundraising. So kudos to that. I think it speaks volumes about you as a founder, you as a CEO and your company, Lex. One of the funny, fun things I like to do is ask a side question, not related to the fundraise, but more about the business. but I like just figuring out if there's some. Neat little nuggets to tease out. So you have a social app. It started in the dating [00:36:00] space, but now it's around community building. Um, do any specific customer moments come to mind, either like crazy stories, uh, heartwarming things? What are your favorite things to share about stuff that has happened on, on Lex and the funnier, the better, or the more heartwarming?

Jennifer Lewis: yeah. Um, actually one of my favorite, I have so many, Again, I, I read Lex every day cause it's what keeps me focused. So I have a million funny stories and some things that are probably like too risque to say on the podcast because people post everything on it. But one of the most heartwarming things is actually, um, something we did.

We have to help people navigate the feed. We have tags and the things like groups, community, T4T, BIPOC. They help people navigate and find the people that they want to connect with. And we shipped a new product feature in October, which was a custom tag as a limited edition tag, just out for a few days.

And it was national coming out day, which is in October. And we asked people to like share their coming out stories with the [00:37:00] community. And. It. I think that, and, you know, people did and they loved it and lots of people. And I think just seeing all of our community, um, from all around the US around the world, just like everyone just sharing their own version of like what coming out meant to them and doing it in this space that was like safe for them.

That they were able to express themselves. They weren't gonna get moderated against, they weren't gonna get their content banned or shadow banned like they might do on TikTok or Instagram. They like had this space to like shop as their whole selves. And some of it was like sad. Some of it was heartwarming.

Some of it was racy, um, but just putting that feature in, which only we could have done because you can only do that in a network that is, that we understand our audience so much. So I think that was a, like, that's one of like the really, shipping that feature and like seeing that go into the world was a really heartwarming, um, heartwarming moment for us.

Jason Yeh: Love that.

That was my conversation with Jennifer Lewis co-founder and CEO of Lex, the social app for the LGBTQ plus community.

I hope this episode [00:38:00] helped you gain perspective around raising venture capital and what it takes to scale your company.

After the break, I'll be talking to my producer page about what she heard in our conversation with Jennifer.

[00:39:00]

Hello, Jason. I wish you had a longer. Formal name. So I could say like, hello. I know it's so short.

Page roll. No, it's just page. Hey, page. Just page. Um, This was a fun episode. I feel like it was kind of a little bit different than usual in a really good way. And I, I don't know, there's a lot of things about Jennifer that interested me. Like first off, I found her, I really liked how she dug a little bit more into her background and her experience because Lex, you know, this LGBTQ social app [00:40:00] is something that is.

Newer, like in terms of like what is being introduced to society in that way. Like there's a lot of new things about it and I loved hearing about, um, her experience with working in strategy for big companies and, and like basically her job was to look out five years from now and wonder what's going to be the next big thing.

So I thought it was cool hearing about that and then seeing how she ended up coming up with the idea for Lex, which is now, you know, kind of taken off. So. Yeah, I mean, it's funny. I think we, we, we don't talk to as many people with such a traditional background, large company background that end up, um, running, you know, high growth startups, innovative things.

but just another version of startup founders, CEOs, people that raise capital. Can come from all walks of life. And yeah, I also think it's great that we were able to find someone raising for a space that is like overlooked at times. yeah, [00:41:00] I think it definitely made for a good conversation. Yeah. And I, I really do like how she went over the stats and things like that.

But my favorite part was how she went over the stats and we all know that the industry has biases around certain people like female founders and LGBTQ and people that they just aren't used to seeing. But I loved how after she went through that, she literally shared something, which I had to write down because I loved it so much.

She said, the odds aren't in my favor, but I can know the statistics and choose to ignore them. I just thought that was so baller and it worked like she reshaped her mindset to be like, okay, I know this is what the industry's telling me, but I can look at that and still choose to believe that there's people out there that are going to fund this really freaking awesome company I'm making.

I just thought that was sick. So good. I love a couple of things about that too. Like the first is, honestly just like having the mindset that you're going to do it. That's it. Is so much of actually doing it. And so I [00:42:00] love that she was able to look that in the, in, in the eyes and just be like, yep, I see those numbers, not me though.

And then I, I literally just posted about this. It was in relation to something different. You know, I did the Memorial day, uh, Murph workout, but I had this thought after finishing about like, just what the feeling of facing adversity, and powering your way through it, like what that feeling is like. Um, and for her to look at those numbers and being like, being like, this is going to be hard, maybe impossible.

Uh, but I know the work that I can put into to get through it. And I can only imagine what it felt like for her to be successful in getting to the other end. And, and like in my post, I said, doing it once kind of gives you the taste of that. And once you taste what it feels like to see adversity and be like, I think I can get through that.

it. My beautiful camera shut off, it overheated, [00:43:00] and I dropped a big f bomb in the middle of this Thought about adversity.

And now for the people watching on YouTube, you're going to have to watch the rest of this on a much lower quality camera, but I do want to finish that thought page. Hey, take it easy. I have this camera. I silently judge you because you don't have a beautiful DSLR set up now. Um, I did want to finish the thought around.

around adversity, which is just like, you get that, that taste of seeing adversity, working through it, sort of re pivoting the pain in your mind of like, as adrenaline and experience and actually getting through to the other side and, and accomplishing a goal. It's a feeling like no other, and it kind of has you chase after more of these difficult situations.

And difficult situations, not many people do them, not many people actually tackle them. So one, there's less competition there too. It usually means there's a [00:44:00] big payoff at the end of it. Uh, and three, I think it just like fully transforms people when you're able to get through it. So, yeah, I love the fact that, um, she kind of, Stared it right in the eye.

I was like, this is going to be hard, maybe impossible. And did it. Yeah, it's crazy. And adversity aside, you know, imagine having most of your round filled out and then the SVV crash happens and then you literally have to start over. Like. I think about who would have given up, you know, and, and she spoke in the episode about how that was actually her driving force.

Like that ended up being the biggest blessing for her, which I think is just a, like her mindset was really, um, admirable. Like when I was listening, cause she just reshaped everything to be like, Oh no, this is actually pushing me into where I need to be. And she ended up meeting even like amazing investors that had been trying to get in contact with her.

Like, The whole thing was, was crazy. Um, but I did want to ask you some things. I wasn't [00:45:00] confused about anything she was talking about, but I'm more so curious and kind of wanted to bounce ideas back and forth about, she was talking about this idea of how it can feel like you're wasting time when you're talking with investors who don't either, they don't know your problem or really understand it, or they're just not interested.

And how you waste a lot of time doing that. And that you should go after investors who at least have like a foot in the door, you know, like they, they have some interest there. In my thought, I was trying to put myself in like the mindset of a founder who's struggling with their raise. And I was like, Thinking about how I might feel like, what if I can't find an investor that is half in?

And, and then I can see how people get caught up in this cycle of like wasting time. So I kind of wanted to hear your opinion on that. I don't think there's a right answer, but I don't know if you've experienced something in the past with that, or you've seen deals that kind of like, [00:46:00] I just want you to add some, some flavor on that.

No, I, I'm, I love that you pulled this out and certain times I'll interview founders and funded and they'll say things. Um, and I think it's good enough for them to say it. And I don't always like engage, or I don't always like push back because I think their point of view is valid. This point of view does come up a lot, um, with a bunch of founders, Dylan Bannon for example.

Um, also had thought, which was, you know, I, I know when an investor is interested in like the first 30 seconds, I don't, and I try not to speak to anyone that isn't interested. And it's like, I'm going to talk to those people and nobody else. And if I know that they're not interested, I move on. And I, and that is a way of.

of fundraising that might work. There are some challenges that go along with that because if you are only narrowing your focus to the top 5 percent of investors out there who are definitely aligned with you and know your stuff before you even talk about it, then that [00:47:00] might not be a big number, especially for founders who don't have the right network, who can't get to the right people.

My belief is that there are probably three categories of investors that you might talk to. There are categories on either end of the spectrum. One is the one that, um, Jennifer and Dylan talk about, which is, uh, Dylan from Mindbloom, by the way, if you want to check out that episode. Dylan and Jennifer, there it's like one category is the super lined, understand your space.

You don't have to describe it. They just know and they're interested in it. The other end of the spectrum is completely no effing way would I even think about investing in this space for a variety of reasons. I actually think there's a big fat middle, and that big fat middle is a section of investors who With the right signal, with the right clear and concise storytelling [00:48:00] actually can be brought along to be excited about what you're doing.

And, and my approach and my thought is that actually a lot of the work that you put into preparing for a fundraise, getting your materials right, getting your storytelling down pat, the way you communicate, the way you organize the process, those things Can actually turn more of that big fat middle into a category of investor that would be excited to invest in you.

So my perspective, and I'm not the, I'm, you know, I'm not the only person out there giving perspectives on this, but I would tell people who are thinking about fundraising to not sleep on that fat middle and get your stuff good. If not great, so that it can shift a lot of those perspectives. And look, could you be wasting time?

Could be like there might in that fat middle, there might be some people that you just can't convince, but I do think a lot of fundraising is making [00:49:00] sure you have enough shots on goal, have enough people that you talk to and spend time with the people that you can convince. Yeah, and like, know your limit, I guess.

Like, kind of feel it out when you get to a point. But don't shun someone away. And I don't even know if that's what she was saying, but this is how I've been thinking about it. Um, like, don't shun someone away. Um, just cause you're not sure if you might waste time. Like, try it and then, and then if you feel like they're just messing with you and sometimes you won't know and then you will end up being messed with, but that's kind of a part of the game from what I've seen, it's like this total like social battle of trying to figure out is the person leaning in?

Are they not? Like there's so many factors that go into it. And yeah. You, I agree with what you said, like you might end up being able to push a decent amount of people over the line if you display your story and your materials correctly. Yeah. The last thing I'll say on that is like, you're right. It's, can I tell you what the exact [00:50:00] framework is or the way you identify whether or not someone is going to waste your time?

No. And so you are going to have conversations. That essentially wastes your time. There is so much serendipity associated with business development and fundraising, whether it's talking to someone that you thought maybe wouldn't be interested, but ended up being really interested after you told them the right story and they led you around.

Or if it's something a little bit more subtle and not, you know, full term sheet, but like you meet someone, you're able to convince them and get them excited about something. And look, you're, you're talking to some of the most connected people in the world. Maybe they don't invest, but maybe they introduce you to someone.

Maybe they introduce you to a great hire. Maybe they connect you to a great business development opportunity. And so this is a, you know, one of those other reasons that I do like people. Devoting a segment of their calendar, of their time to fundraising, hitting it really hard, talking to a lot of people, [00:51:00] um, getting, and getting out of it what you can.

Yeah. And I think Jennifer actually said something similar in the episode to the point of like, even if they don't invest in you, they might still talk about you. And I really liked that point. Cause it's like in that regard, if you like reshape your mindset, maybe you're, you never are wasting time. I mean, maybe there's some people you're really wasting time with, but for the most part, even the people who say no, like they still might have someone else who they want to tell you about, or you don't know how like word's going to spread, um, over time and it might end up coming back around in one point in time.

Totally. This brings up. A sort of tangential piece of advice that I want to make sure that I give. I was thinking about that as she was telling me this, um, you know, they might still talk about you. Remembering that people still talk about you after a meeting, even if they pass is super important, right?

Like, um, and so you want [00:52:00] to. You want to give someone a great impression, even if your deal isn't right for them, because one, they could proactively tell people about you. I think that's actually what Jennifer was, was referencing like, uh, Paige, your deal isn't great for me, but you know, I'm going to go tell people I just met this great founder, not in our space, not in our stage or whatever, but people should meet her.

That's one thing. But another thing that comes up is as other people are looking at the deal. figure out that you talked to the same founder.

Paige, I heard you, you met with Jennifer. Like, what'd you think? Right? And if, if after you, you know, at the end of a call where someone was like, basically I'm going to pass, if you're like F this VC and you start being rude, you start, start giving off bad signals, you know, that can really color the way someone talks about you.

They can either say in that [00:53:00] conversation, yeah, it wasn't for me. Didn't get a great vibe. Or they could say, you know, wasn't for me, but I really loved her. Really loved that founder. And that means a lot, right? That means a lot. Keeps the door open. Totally. Totally. It like helps color and keep push momentum in your favor.

With a VC that is a little bit more in line with your company and your trajectory.

That's the debrief. Love that. Thanks Paige. See ya.

[00:54:00]

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